Mandatory Country of Origin Labeling:

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Mandatory Country of Origin Labeling

• Tom Stenzel Deborah White
• Robert Guenther SVP CLO United Fresh
  Produce Assn Food Marketing Institute

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September 30, 2008 only 50, 49, 48 days away

• Were all in this together
• Retailers obligated to consumers
• Suppliers obligated to retailers
• Market forces will respond
• Everyone will be subject to
• Recordkeeping
• Penalties
• Costs

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Implementation

• 2002 Farm Bill provisions
• 2008 Farm Bill amendments
• Interim Final Rule (August 1, 2008)
• Comments due September 30, 2008
• Effective September 30, 2008
• Applies to covered commodities produced or
  packaged after September 30, 2008
• For produce, produced harvested
• USDA 6 months of education and outreach

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• Basic Requirements

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Statute

• Requires retailers to inform consumers of the
  country of origin of all covered commodities
  Section 282(a)(1)
• Requires anyone engaged in the business of
  supplying a covered commodity to a retailer to
  provide CoO Section 282(e)

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Does the law apply?

• Is the product sold by a retailer?
• Is the product a covered commodity?

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Step 1 Retail Labeling

• Retailer, as defined by PACA
• Invoice cost of perishable agricultural
  commodities gt 230,000 per calendar year
• Food Service exemption
• Rule exempts restaurants, cafeterias, saloons,
  taverns, salad bars, delis, and other food
  service enterprises located within retail
  establishments that provide ready to eat foods
  that are consumed either on or outside the
  retailers premises.

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Step 2 Covered Commodities

• Perishable Agricultural Commodities
• Fresh and frozen fruits and vegetables of every
  kind and character
• Also
• Seafood (fresh and frozen)
• Meat (beef, pork, lamb, chicken, goat)
• Peanuts, macadamia nuts, pecans no other nuts
• Ginseng

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Processed Exclusion

• Ingredient in a processed food item is excluded
  from the requirement for country of origin
  labeling
• Two-pronged definition either
• Specific processing resulting in change of
  character such as
• Cooking (frying, broiling, grilling, boiling,
  steaming, baking, roasting)
• Curing (salt- or sugar-curing, drying)
• Smoking (hot or cold)
• Restructuring (emulsified, extruded)
• OR
• Combining with at least one other covered
  commodity or substantive food component
• Addition of water, salt or sugar to prepare for
  consumption NOT sufficient

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Examples of Processed Produce Products

• Bag of frozen peas and carrots
• Separately, each would be a covered commodity
• Chocolate covered strawberry
• Roasted peanuts
• Caramel, chocolate and pecan candy bar
• Eggplant parmagiana
• Fruit medley with melons, bananas, cherries
• What about mix of watermelon and cantaloupe?
• Mixed berries?
• Salad mix with lettuce carrots
• What about romaine red leaf?

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• Origin Designation

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United States Origin

• Statutory standard
• Exclusively produced in the United States
• Interim final rule
• From products produced in the United States
• Produced grown for purposes of perishable
  ag. comm. covered nuts/ginseng
• If subsequently processed outside US, product can
  maintain US origin IF
• Identity of the product is maintained
• Substantiating records

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Imported Produce

• If grown outside U.S., retains origin declared to
  CBP, assuming no substantial transformation in
  U.S.
• Difficult to imagine steps sufficient to effect
  substantial transformation that would not
  render the produce processed and, therefore,
  not subject to COOL

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State, Local, Regional

• Negotiated into 2008 Farm Bill to permit for
  United States produce
• Expressly allows state, local or regional
  labeling
• Only for covered produce, peanuts, pecans,
  macadamia nuts and ginseng
• USDA extended to permit state, local or regional
  labeling for imported produce
• Retailers need to decide whether to use

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• Mechanics

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Markings

• Wide range of labeling alternatives
• Label, placard, sign, stamp, band, twist tie, pin
  tag
• PLU stickers allowed
• USDA urges retailers to post sign in addition to
  PLU stickers
• Will address stickering efficacy through
  enforcement tools
• Conspicuous location
• Legible, but no prescribed fonts
• Abbreviations rarely accepted
• Only US, UK and Luxemb
• Symbols and flags alone are NOT sufficient

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Declaration

• Three options
• Statement
• Product of US
• Origin name only
• E.g., PLU stickers
• Checkbox (that conforms with other labeling
  requirements)
• Bag of frozen fruit

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Commingled Products

• Single type of produce sourced from multiple
  countries
• Covered commodities of the same type presented
  for retail sale in a consumer package that have
  been prepared from raw material sources having
  different origins
• Examples
• Bag of strawberries from multiple countries
• Bag of frozen peas from multiple countries

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Commingled Products

• Must be labeled in accordance with existing
  Federal labeling requirements

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Bulk Containers

• May contain covered commodities from more than
  one country of origin.
• All possible countries of origin must be listed.
• Issues
• PLU stickers on some product in mixed bin
  indicate one country sign for another country
• Resolve with records?

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Remotely Purchased Product

• Internet sales or home delivery
• Retailer can provide origin information on sales
  or delivery vehicle
• Provision included in seafood IFR in response to
  comments

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• Recordkeeping

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2008 Amendments

• 2008 Farm Bill deleted 2002 Farm Bill record
  provisions and replaced with following
• USDA may audit any person that prepares, stores,
  handles, or distributes a covered commodity for
  retail sale
• 2. Anyone audited required to verify CoO
  declaration. Sec. 282(d)(1), (2)
• 3. USDA prohibited from requiring records other
  than those maintained in the course of the normal
  conduct of business
• Records maintained in the normal conduct of the
  business
• Deemed sufficient for verification
• E.g., import documents, producer affidavits

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General

• Who is affected?
• Retailers
• Wholesalers
• Re-packers
• Growers
• General requirements
• Legible
• Electronic or hard copy
• Maintained at any location, provided can be
  retrieved within 5 business days
• One year retention period for records identifying
  suppliers

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Retailer Records

• 1. Records to substantiate claims made at retail
• For pre-labeled, consumer-ready products, no
  additional store level record required
• Ex. Bag of frozen carrots
• For products that arent pre-labeled by the
  supplier
• Need record that identifies supplier, covered
  commodity and CoO
• May be kept at any location
• Must be produced within 5 business days of
  request
• Challenge
• If the retailer receives a case of bulk string
  beans with the origin on the box, retailer will
  either be required to keep the box until the
  beans are sold or obtain an alternate record of
  CoO, such as the supplier invoice or an extra
  record in each case
• When is produce pre-labeled? PLU stickers??

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Retailer Records

• 2. Records to identify supplier must be
  maintained for 1 year from date of origin
  declaration at retail
• Covered commodity Supplier CoO (for products
  not pre-labeled)

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Intermediary Suppliers (such as Wholesalers)

• Obligation to inform recipient of CoO of covered
  commodity
• On product, master shipping container or document
  that accompanies the product thru retail sale
• Record to establish and identify immediate
  previous source and immediate subsequent
  recipient
• Maintain for 1 year from date of transaction
• Issues
• Degree of accuracy
• Traceback vs trace forward

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Initiating Suppliers (e.g., Growers)

• Same as intermediary suppliers
• Must possess or have legal access to records
  necessary to substantiate claim

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Importers of Record

• Records must
• Provide clear product tracking from the port of
  entry to the immediate subsequent recipient AND
• Accurately reflect the country of origin of the
  item as identified in relevant CBP entry
  documents
• Be maintained for one year

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• Enforcement

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Audits

• Set by USDA HQ
• Sites picked
• Forms (samples from seafood on FMIs website)
• Conducted by states under MOUs
• Results sent back to USDA HQ
• Action taken only by USDA

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Liability Harmonized

• Single standard applicable to all
• Notice 30 day opportunity to cure
• Secretary must find
• No good faith effort to comply
• Continue to willfully violate statute with
  respect to violation about which received notice
• 1,000 fine

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Implementation Timing

• IFR effective September 30, 2008
• Products produced or packaged before September
  30, 2008, not subject to IFR
• Comments due September 30, 2008
• Industry education/outreach 6 months
• Practicalities of USDA enforcement apparatus

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Questions

• Contact Info
• Ag Marketing Service, USDA
• cool_at_usda.gov
• Robert Guenther Deborah White
• 202.303.3400 202.220.0614
• rguenther_at_unitedfresh.org dwhite_at_fmi.org